U.S. patent application number 11/757755 was filed with the patent office on 2007-12-06 for mortgage loan product.
Invention is credited to Warren Brasch.
Application Number | 20070282737 11/757755 |
Document ID | / |
Family ID | 38791512 |
Filed Date | 2007-12-06 |
United States Patent
Application |
20070282737 |
Kind Code |
A1 |
Brasch; Warren |
December 6, 2007 |
MORTGAGE LOAN PRODUCT
Abstract
In the present invention, a system and method is provided for
making insurance policies and products, consumer goods, property
taxes, household obligations and credit card debt more affordable
by paying for such items, (collectively known as goods and
services) through residential mortgages, home equity lines of
credit and any other residential liens, by amending the interest
rates or the balances due or a combination of both the interest
rate and the balance due on such mortgages. The interest rates
and/or balances charged on the aforementioned secured loans will be
increased sufficiently to collect enough money each month to pay
participating homeowners' monthly payments for their homeowner's
insurance or other debts and products they chose to include within
their mortgages. Because interest paid on most mortgages is tax
deductible, this invention has the potential to offer a significant
financial benefit.
Inventors: |
Brasch; Warren; (Franklin,
MI) |
Correspondence
Address: |
DOBRUSIN & THENNISCH PC
29 W LAWRENCE ST
SUITE 210
PONTIAC
MI
48342
US
|
Family ID: |
38791512 |
Appl. No.: |
11/757755 |
Filed: |
June 4, 2007 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
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60804034 |
Jun 6, 2006 |
|
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60823786 |
Aug 29, 2006 |
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Current U.S.
Class: |
705/38 |
Current CPC
Class: |
G06Q 40/025 20130101;
G06Q 40/08 20130101; G06Q 40/02 20130101 |
Class at
Publication: |
705/038 |
International
Class: |
G06Q 40/00 20060101
G06Q040/00 |
Claims
1) A real estate financing method, comprising the steps of: a)
maintaining a real estate financing contract with a borrower, which
contract is a loan for a principal amount, established at a first
predetermined interest rate, and secured by a mortgage on
residential real estate held by the borrower; b) receiving a
request by the borrower or its designated representative to assume
responsibility to pay a financial obligation incurred by the
borrower during the term of the financing contract; c) engaging in
a transaction for providing funds for payment of the financial
obligation of the borrower, by paying the financial obligation on
behalf of the borrower, by advancing funds to the borrower
directly, or a combination thereof; d) amending the contract during
its term to account for the providing of the funds, and in direct
response to the transaction of providing of the funds, to increase
the interest rate to one or more interest rates different from the
first predetermined interest rate, to increase the principal
amount, or a combination thereof; and e) receiving interest
payments from the borrower pursuant to the amended contract.
2) The method of claim 1, wherein the method is free of a step of
re-qualifying the borrower, appraising the value of the real
estate, or both during the term of the contract and after the step
of receiving the request.
3) The method of claim 1, wherein at least two of the steps are
consummated using a secure data processing network.
4) The method of claim 1, wherein the financial obligation includes
an obligation of the borrower to pay for a policy for one or more
of the following: property and casualty insurance, motor vehicle
insurance, marine insurance, health insurance, disability
insurance, flood insurance, whole and/or term fixed or variable
life insurance, contracts for the purchase of goods or services,
obligations specifically related to home ownership, contracts for
utility services, cable and/or satellite communications,
condominium dues and cooperative living arrangement fees,
landscaping, snow removal, fixtures, furnishings, appliances,
cleaning, home repairs, capital improvements, maintenance, for the
purpose of paying for legal services or other professional
services, child support, alimony, payment of law suits or
settlement of law suits, obligations that relate to ordinary
consumer purchases, financial obligation for the purpose of paying
a non-reimbursed medical expense, the purchase of services for
child care, assisted living care, transportation services, secured
or unsecured loans, and tax payments.
5) The method of claim 1 further comprising a step of providing
regular reports to the borrower to apprise the borrower of account
information.
6) The method of claim 1 further comprising a step of accepting a
referral of the borrower by a third person with whom the borrower
has his or her financial obligation.
7) The method of claim 6, wherein the step of accepting the
referral of the borrower by a third person with whom the borrower
has his or her financial obligation includes paying a fee or
accepting a fee.
8) The method of claim 1 further comprising collecting a fee from
the borrower, any third person with whom the borrower has his or
her financial obligation or each in order to use the method.
9) The method of claim 1 further comprising a step of
cross-promoting the method with promotion of goods, services or
both, offered by a third person.
10) The method of claim 9, further comprising enrolling a borrower
in a program to use the method via the third person.
11) The method of claim 9, wherein the third person is a retailer
of appliances, home entertainment equipment, communications
services subscriptions, telephones, computing devices, or any
combination thereof.
12) The method of claim 1 further comprising a step of
administering an incentives program that rewards the borrower with
benefits on the basis of borrower conduct.
13) The method of claim 12, wherein the incentive is selected from
reduced interest rates, cash rebates, subscriptions, merchandise,
gift certificates, travel discounts, coupons, computer downloadable
information, waiver or discount of fees to use the method, or any
combination thereof.
14) The method of claim 12, wherein the borrower conduct is
selected from timely payment history, maintenance of a
pre-determined credit rating, reduction of principal balance,
elimination of debt for which the method is used to pay, or any
combination thereof.
15) The method of any of claims 1, wherein the step of receiving a
request by the borrower occurs at least in part electronically over
the internet, in person, by mail, by facsimile or any combination
thereof.
16) The method of claim 15, wherein the amending step includes
securing an amendment to the real estate financing contract signed
by the borrower.
17) The method of claim 16, wherein the amending step includes
securing an acknowledgement of the amendment by any third person
with whom the borrower has his or her financial obligation.
18) The method of claim 17, wherein the step of amending the
contract during its term to account for the providing of the funds,
and in direct response to the transaction of providing of the
funds, consists essentially of increasing the interest rate to one
or more interest rates different from the first predetermined
interest rate.
19) A real estate financing method, comprising the steps of: a)
maintaining a real estate financing contract with a borrower, which
contract is a loan for a principal amount, established at a first
predetermined interest rate, and secured by a mortgage on
residential real estate held by the borrower; b) providing
informational and/or explanatory forms to the borrower about the
methods and system described herein; c) providing a network user
interface, an internet website, or other borrower-accessible
network for performing some or all of the steps; d) receiving a
request by the borrower or its designated representative to assume
responsibility to pay a financial obligation incurred by the
borrower during the term of the financing contract; e) providing
documents that include account information of the borrower; f)
providing a competitive bidding system for offering goods or
services to the borrower; g) granting authorized access to a
borrower's account to third parties; h) engaging in a transaction
for providing funds for payment of the financial obligation of the
borrower, by paying the financial obligation on behalf of the
borrower, by advancing funds to the borrower directly, or a
combination thereof; i) amending the contract during its term to
account for the providing of the funds, and in direct response to
the transaction of providing of the funds, to increase the interest
rate to one or more interest rates different from the first
predetermined interest rate, to increase the principal amount, or a
combination thereof; j) receiving interest payments from the
borrower pursuant to the amended contract; and k) complying with a
taxing authority reporting requirements for the interest payments
received.
20) A real estate financing method, comprising the steps of: a)
maintaining a real estate financing contract with a borrower, which
contract is a loan for a principal amount, established at a first
predetermined interest rate, and secured by a mortgage on
residential real estate held by the borrower; b) receiving a
request by the borrower or its designated representative to assume
responsibility to pay a financial obligation incurred by the
borrower during the term of the financing contract; c) engaging in
a transaction for providing funds for payment of the financial
obligation of the borrower, by paying the financial obligation on
behalf of the borrower, by advancing funds to the borrower
directly, or a combination thereof; d) amending the contract during
its term to account for the providing of the funds, and in direct
response to the transaction of providing of the funds, to increase
the interest rate to one or more interest rates different from the
first predetermined interest rate, to increase the principal
amount, or a combination thereof; e) receiving interest payments
from the borrower pursuant to the amended contract; f) complying
with a taxing authority reporting requirements for the interest
payments received; and g) completing a step selected from: a.
providing a home-owning borrower with an investment vehicle in the
course of practicing the methods herein; b. providing a network
user interface, an internet website, or other borrower-accessible
network for performing some or all of the steps; c. providing
documents that include account information of the borrower; d.
providing a competitive bidding system for offering goods or
services to the borrower; e. granting authorized access to a
borrower's account to third parties; f. generating documents for
the borrower to describe results obtained from the use of the
methods; g. providing informational and/or explanatory forms to the
borrower about the methods and system described herein; h.
regularly providing current and potential mortgage product
customers updated lists of participating providers and products as
such lists changes; i. regularly providing current mortgage product
customers with information on new and updated services; j.
providing statements of interest paid and/or any possible mortgage
product transactions that may have a tax effect to a borrower
and/or a taxing authority, k. amending the contract during its term
to account for any changes in the status of the items being
serviced by the mortgage product, or l. any combination of the
above.
Description
CLAIM OF BENEFIT OF FILING DATE
[0001] The present application claims the benefit of the filing
date of U.S. Application Ser. Nos. 60/804,034, filed Jun. 6, 2006
and 60/823,786, filed Aug. 29, 2006, both hereby incorporated by
reference.
FIELD OF THE INVENTION
[0002] The present invention relates to real estate financing, and
more particularly to an improved system and method for
consolidating debt or other financial obligations under a real
estate financing contract.
BACKGROUND OF THE INVENTION
[0003] Currently, there is a practice in the United States mortgage
industry allowing home-owning borrowers to avoid non-tax deductible
mortgage guaranty insurance premium payments (commonly known as
"PMI", or private mortgage insurance) by opting instead for lender
paid mortgage insurance. Briefly, it works as follows: at the
outset of a finance contract relationship, home-owning borrowers
and/or homebuyers borrowing more than 80% of their home's value in
one single mortgage typically must either pay for mortgage guaranty
insurance or agree to pay a higher interest rate than they would
otherwise agree to, essentially financing the cost of the mortgage
guaranty insurance into their interest rate. The mortgage industry
often calls this later method "lender paid mortgage insurance".
Some within the mortgage industry call this product tax advantaged
mortgage insurance. Many mortgagors prefer this alternative to
traditional "PMI" as a tax strategy. Because interest paid on
residential mortgages is tax deductible, an otherwise non-tax
deductible mortgage insurance guaranty premium is converted into a
tax-deductible premium by charging and collecting the premium
within the interest paid on the mortgage. This is accomplished by
increasing the interest rate on a mortgage beyond the rate
otherwise available to the home-owning borrower. The extra interest
paid (differential between what the home-owning borrower could
obtain and the increased rate agreed to) is used to compensate the
mortgage lender for the risk involved in making a mortgage that
exceeds eighty percent of the appraised value. The extra interest
charged and collected is used by the lender or servicer of the
mortgage to pay for the risk of providing a mortgage in excess of
eighty percent of the lesser of the purchase price or the appraised
value. This technique results in the borrower having tax-deductible
mortgage insurance.
[0004] In the present invention, a system and method is described
for making premium payments for insurance products, payments for
condominium association dues and cooperative fees, payments for the
purchase or lease of consumer goods, payments on credit card debt
and student loan debt, property tax payments, and other debt
typically incurred by home-owning borrower's tax deductible by
paying for such items through interest charged on residential
mortgages. Payments on such obligations will be paid through a
home-owning borrower's mortgage interest payments. One objective is
to make the payments for these items tax deductible in a similar
manner that lender paid mortgage guaranty insurance is tax
deductible, but to afford greater flexibility and opportunity to
participate than under the traditional systems. Another objective
is to consolidate a home-owning borrowers' financial obligations
making debt management easier. All references to "mortgages"
throughout this application include by definition mortgages for
home purchases, mortgages to refinance homes, home equity lines of
credit, and any other debt secured by residential real estate, and
particularly pursuant to which the real estate is placed at risk of
foreclosure for default. "Real estate financing contract"
contemplates not only mortgages, but notes associated
therewith.
SUMMARY OF THE INVENTION
[0005] In one preferred approach, the present invention is directed
to a real estate financing method, comprising the steps of: a)
maintaining a real estate financing contract with a borrower, which
contract is a loan for a principal amount, established at a first
predetermined interest rate, and secured by a mortgage on
residential real estate held by the borrower; b) receiving a
request by the borrower (or its designated representative) to
assume responsibility to pay a financial obligation incurred by the
borrower; c) engaging in a transaction for providing funds for
payment of the financial obligation of the borrower, by paying the
financial obligation on behalf of the borrower, by advancing funds
to the borrower directly, or a combination thereof; d) amending the
contract during its term to account for the providing of the funds,
and in direct response to the transaction of providing of the
funds, to increase the interest rate to one or more interest rates
different from the first predetermined interest rate, to increase
the principal amount, or a combination thereof; e) receiving
interest payments from the borrower pursuant to the amended
contract. It is also contemplated that the practice of the present
method will include complying with Internal Revenue Service
reporting requirements for the interest payments received.
[0006] As will be seen, the present invention offers improved
systems and methods for consolidating financial obligations during
the term of a real estate financing contract, such as consumer
obligations, in order to facilitate the making of payments for
insurance policies, insurance products, condominium association
dues and cooperative fees, consumer goods, property taxes, credit
card debt, any combination thereof, or the like. It will be seen
that the methods and systems herein provide a way to make the
undertaking of such obligations more affordable, by allowing for
payment of such obligations through payments on residential
mortgages, home equity lines of credit and any other residential
liens, by amending the interest rates or the balances due or a
combination of both the interest rate and the balance of mortgages.
The interest rates and/or balances charged on the aforementioned
secured real estate loans, even though increased sufficiently to
collect enough money each month to pay participating home-owning
borrowers' monthly payments for their obligations, will reduce the
number of transactions required by the borrower, while helping to
assure payments to creditors of and vendors to the borrower. In
addition, because interest paid on most mortgages is tax
deductible, this invention may offer a potentially significant
financial benefit to mortgages. The invention also helps to avoid
the burden and inconvenience of undertaking a complete refinancing
transaction, by which a borrower will need to re-qualify for a
particular mortgage. It also helps to avoid the need to secure the
real estate under multiple liens. That is, the invention
contemplates its practice on a first loan (e.g., the primary
mortgage), and can afford benefits without the need for a second
loan (e.g., a home equity line of credit).
[0007] Also, among the potential benefits of using the invention
are the possibility that a home-owning borrower user of the methods
and/or system herein may be able to improve his, her or its credit
ratings, particularly given that use of the methods could result in
savings that can be used to pay down debt at a rate faster than
would otherwise be possible. Also, using the methods herein has the
potential to result in bills being paid on time thereby reducing
potentially derogatory or harmful credit references.
BRIEF DESCRIPTION OF THE DRAWINGS
[0008] FIG. 1 is a flowchart illustrating one general preferred
method according to the present invention.
DETAILED DESCRIPTION
[0009] In brief, as seen in FIG. 1, the teachings herein
contemplate a real estate financing method, comprising the steps
of: a) maintaining a real estate financing contract with a borrower
(and particularly a home-owning borrower), which contract is a loan
for a principal amount, established at a first predetermined
interest rate, and secured by a mortgage on residential real estate
held by the borrower; b) receiving a request by the borrower (or
its designated representative) to assume responsibility to pay a
financial obligation incurred by the borrower; c) engaging in a
transaction for providing funds for payment of the financial
obligation of the borrower, by paying the financial obligation on
behalf of the borrower, by advancing funds to the borrower
directly, or a combination thereof; d) temporarily or permanently
amending the contract during its term to account for the providing
of the funds, and in direct response to the transaction of
providing of the funds, to increase the interest rate to one or
more interest rates different from the first predetermined interest
rate, to increase the principal amount, or a combination thereof;
and e) receiving mortgage interest payments from the borrower
pursuant to the amended contract. The teachings also contemplate
complying with Internal Revenue Service reporting requirements for
the mortgage interest payments received, and counseling borrowers
to seek independent counsel to assure the propriety of tax
deductions made on the basis of interest payments made herein.
[0010] The type of financial obligation herein may be selected from
any of a variety of obligations. In one specific aspect the
financial obligation is an obligation pursuant to which the
borrower must pay an insurance premium for maintaining an insurance
policy. The definition of "insurance" herein can include, but shall
not be limited to, property and casualty (homeowner's insurance),
motor vehicle insurance (including car, truck, and motor cycle
insurance), marine insurance, health insurance including when
desired optical and or dental insurance, disability insurance,
flood insurance, whole and term life insurance and all other forms
of insurance excluding private mortgage insurance and lender paid
mortgage insurance. Thus, the financial obligation may include an
obligation of the borrower to pay for a policy for (in addition to
or other than private mortgage insurance and lender paid mortgage
insurance) property and casualty insurance (e.g., homeowner's
insurance), motor vehicle insurance (e.g., car, truck, and/or motor
cycle insurance), marine insurance, health insurance (e.g., major
medical, prescription drugs, optical and/or dental insurance),
disability insurance, flood insurance, whole and/or term life
insurance, other forms of insurance excluding private mortgage
insurance and lender paid mortgage insurance, or any combination
thereof.
[0011] The type of financial obligation is not limited to
insurance, but may also involve contracts (e.g., one or more
installment contracts or revolving credit contracts) for the
purchase of goods or services. In one aspect, it is contemplated
that the financial obligations may include obligations specifically
related to home ownership, such as (without limitation), contracts
for utility services, cable and/or satellite communications,
landscaping, snow removal, fixtures, furnishings, appliances,
cleaning, home repairs, capital improvements, maintenance, or any
combination thereof. For this specific aspect, it is contemplated
that periodically (e.g., annually), an itemized report document is
or may be generated for the borrower by the lender or other
administrator of the contract program, pursuant to which the
borrower is apprised of the individual component costs and/or total
cost of homeownership.
[0012] In another approach, the financial obligation is for the
purpose of paying for legal services or other professional services
in connection with creating and/or maintaining an estate plan. The
obligation may call for payments to a trustee, an accountant, a
lawyer, a banker or other fiduciary in accordance with such plan.
In this regard, the methods may include a step of preparing for a
borrower a document which might include a designation of the
location of important estate planning documents, and contact
information for facilitating the handling of affairs of the estate
upon death of the borrower.
[0013] Of course, the financial obligation may relate to ordinary
consumer purchases (e.g., automobiles, electronics, health club
memberships, jewelry, etc.). The financial obligation may be for
the purpose of paying a non-reimbursed medical expense, such as an
expense for cosmetic surgery, vision correction, orthodontics or
the like. The obligation may involve the purchase of services for
childcare, assisted living care, transportation services, or
otherwise. The financial obligations herein also contemplate
existing secured or unsecured loans (e.g., credit card obligations,
student loans, or otherwise). Tax (e.g., income and/or property)
payments may also be included among the financial obligations. Any
combination of the financial obligations taught herein may also be
employed. Likewise, the method may include a step of generating a
document such as an itemized listing of purchases for inventorying
assets of the borrower.
[0014] As can be seen, it is thus also within the methods of the
present teachings to include steps pursuant to which one or more
independent entities provide goods or services for the borrower and
enter into an agreement to be paid for the goods or services
through proceeds paid pursuant to the real estate financing
contract herein. For example, a doctor who performs an elective
procedure for a patient not covered by health insurance may have a
relationship by which he or she refers the patient to a provider of
the real estate financing contracts herein, and the provider then
enters into a real estate financing contract with the patient, so
that the patient may ultimately realize a tax benefit from the cost
of the procedure.
[0015] Administration of the contract may be employed in
combination with administration of other programs for borrowers.
For example, the lender may facilitate the participation of the
home-owning borrower in an advantageous group benefits program to
be paid for through proceeds from the real estate financing
contract, (e.g., health insurance may be offered for participation
in group rates and discounts for borrowers electing to enter into a
real estate financing contract according to the methods herein, by
which they would pay for such insurance through their
mortgages).
[0016] Successful widespread use of the methods herein may be
enhanced by establishing a network of goods or services providers.
Such networks are expected at least in part to rely upon a system
of referrals for bringing together borrowers in need of a good or
service, and the providers of such goods or services. As can be
appreciated, therefore, the methods herein may include a step of
accepting a referral of the borrower by a third person with which
the borrower has his or her financial obligation. Such a step may
include a lender paying a fee to the third person or accepting a
fee from the third person. The methods herein thus further include
charging fees to providers of mortgages, mortgagees, mortgage
bankers, mortgage brokers, mortgage lenders, mortgage originators,
banks, insurance underwriters, insurance agents, insurance brokers,
insurance companies, home equity lenders and fixed rate second,
third or other junior lien lenders bankers, or brokers who offer
homeowners, homebuyers, and mortgagors the opportunity to pay for
insurance policies and products (excluding lender paid mortgage
insurance and private mortgage insurance) by offering them interest
rate amendments, modifications, charges or fees or balance
amendments that permit homeowners to pay for insurance policies and
products (excluding lender paid mortgage insurance) through
payments made on mortgages and other liens on real estate.
[0017] It is therefore to be appreciated that the present teachings
contemplate a method and system of paying for financial obligations
other than those normally attendant with a primary real estate loan
and mortgage transaction (e.g., private mortgage insurance and
lender paid mortgage insurance) by charging and collecting interest
on both fixed and adjustable rate mortgages (whether interest only
or not) and all other liens on residential real estate to the
extent needed to pay for such obligations. The methods and systems
may include charging an increased interest rate on both fixed and
adjustable mortgages and other residential liens above and beyond
that which borrowers would otherwise agree to (or in the case of
existing mortgages have agreed to) to pay the financial obligations
(e.g., to pay for premiums or other charges due on insurance
policies and products).
[0018] One feature of the invention is that it allows home-owning
borrowers flexibility in accessing funds for transactions, which
under current traditional financing practices would ordinarily
occasion the home-owing borrower to re-finance under a new finance
contract obligation (e.g., one by which further a re-qualification
process would become necessary, new loan documents would need to be
prepared, documents would need to be recorded, the real estate
appraised, and the like). The methods of the present invention
avoid some or all of these by allowing the initial real estate
financing contract to be amended during its term. Thus, under one
approach herein, the methods contemplate a step of amending the
contract during the term of the contract, without the need to
re-qualify the borrower, appraise the value of the real estate
securing payment or both. It is thus possible that the real estate
financing contract will be established at its origination to
address existing financial obligations and allow for future
obligations. In such instance, or at any time during a contract, it
may be possible (in lieu of or in addition to an increased interest
rate and/or increased principal balance) to charge the borrower a
single fee (e.g., a specific origination fee).
[0019] The present teachings also contemplate an adjustment to the
borrower's account upon cancellation or termination of the
financial obligation (e.g., upon conclusion of the borrower's
period of obligations to pay for private mortgage insurance). For
instance, the borrower may then return his or her account balance
or interest rate to a predetermined amount.
[0020] Though generally the real estate financing transactions
contemplated herein will be first mortgages on a borrower's primary
residence, they need not be. Other financing transactions are also
within the scope, such as encumbrances on properties that are
junior liens to first mortgages, such as home equity loans and
fixed rate second and third mortgages.
[0021] Interest herein may be charged and collected on a monthly
basis or other calendar based system. Optionally interest and
charges may be held by the lender and used by the lender as needed
to pay the obligation on behalf of the borrower. The transactions
herein may involve transferring balances owed from one transaction
to another, or to entire refinancing of existing financing
contracts.
[0022] The invention herein has various ancillary capabilities,
such as an instrumentality for pursuing an investment portfolio.
For example, in another aspect of the invention, it is contemplated
that the lender, borrower or both may deposit certain funds from
the lender into an investment vehicle during the term of the
contract (e.g., selected from one or more of investment accounts,
stock brokerage and mutual fund accounts, money market accounts,
certificates of deposits, savings accounts, checking accounts, or
retirement accounts). Money from the account can be withdrawn by
the lender to as needed to assure payment of the financial
obligation undertaken. Also, some or all of the interest or gains
realized from the investment vehicle may be shared as between the
lender and the borrower, or given entirely to one of them.
[0023] The present invention also contemplates the establishment
and use of a data processing system and associated hardware and
software for administering or otherwise performing the steps of the
present invention. In general, the data processing system will
include a central processing unit, a communications interface for
transferring information to and from other data processing systems,
one or more user interfaces (which may be located at a number of
remote sites (such as a borrower residence, a loan origination site
such as a bank, real estate finance center, a real estate sales
office or the like). Communications may be over a secure network,
e.g., a secure Internet site. One or more databases associated with
the data processing system may be employed for compiling or storing
data pertaining to a transaction. The data processing system may
also be suitably configured for generating loan origination and/or
closing documents. The present invention also contemplates the
service and maintenance of mortgage accounts using the data
processing system. For example, mortgage payments for mortgages
contemplated within the present teachings may be made
electronically using the data processing system. Borrowers using
the data processing system may be assigned a unique identifier
(e.g., an alphanumeric identifier, a bar code, a radiofrequency
identification signal, or the like), which the borrower may use to
access information about the account.
[0024] As indicated, another aspect of the present invention
pertains to document generation, such as the generation of reports,
statements or both generated for the benefit of the borrower, and
specifically in a suitable manner for facilitating the borrower's
finances management. The reports, statements or both may be in
electronic format, paper format or in another medium. In one
aspect, it is contemplated that an electronic transmission of data,
containing relevant tax information, can be transmitted using the
data processing system (e.g., via the internet). It is also
envisioned that the information may be provided in a format
pursuant to which it is able to interface directly with available
tax preparation software (e.g., TURBOTAX by Intuit, IRS FREE FILE,
or a like product that can be used by a borrower or his or his
designated tax preparation representative). In this manner, the
data transmitted can be incorporated directly into a form for
preparing a tax return, thereby avoiding the potential for operator
error in the input of such information during the tax preparation
process.
[0025] By way of example, the documents may be suitable statements
that could include account balances and payment information for
each participating account. The statements may offer a consolidated
summary showing total monthly payment due based upon all included
debts, a detailed summary showing each individual debt's monthly
payment, history, and balance, and a summary of the monthly and
year to date savings achieved by participating in the invention.
The statements may include application information to include
additional debts within the invention as well as offer participants
instructions on how to remove accounts from participation in the
invention. The instructions may allow for telephonic, written,
faxed, Internet generated (including e-mailed and web-site based
formats) platforms for making such changes. The statements may also
offer opportunities to invest money saved by employing the method
of the invention, into investment and savings accounts. The
statements may further provide examples showing the gains
achievable from investing the money saved by utilizing the
invention, and the compounded growth opportunities available over
multiple years and compare such gains to paying debts without the
benefits of the invention.
[0026] As mentioned, such documents can help provide a convenient
vehicle for a borrower to manage personal finances. For example, if
a borrower elects to operate within the methods herein and secures
a real estate financing contract to cover payments of various
different personal expenses, each such expense can be itemized on a
statement or report document, and the borrower can be afforded
access to one or more tools for tracking his or her expenses, such
as by category. This feature could be performed remotely. For
example, a borrower can use the Internet to access account
information and create or run report documents. One possible
feature that may be included in statement or report documents a
comparison of the amount of money saved (e.g., by way of tax
benefits, reduced interest payments, or both) by the borrower using
the methods herein as compared with not using the methods. Another
feature might further include such comparison along with a
projection of how much the cost savings would amount to if invested
over time.
[0027] The present invention can be administered by any of a number
of different entities. In one aspect, the entity is an entity that
concentrates exclusively on mortgage transactions. In another, the
entity is a financial services company (e.g., a bank), a financial
planning company, or even an insurance company. Thus a party
administering the methods herein in a transaction with a
home-owning borrower might be a lender (e.g., a mortgage company,
bank or the like) or a third party service provider.
[0028] It is appreciated that the obligation to provide private
mortgage insurance may cease to exist after a certain amount of
principal is paid. In one aspect of the present invention, it is
contemplated that a product can be offered to a borrower by which
the tax savings realized is segregated and periodically applied to
the payment of principal. Thus, the tax benefit that may be
obtainable by use of the present teachings may be directly employed
for loan principal payment.
[0029] It will be appreciated that the methods herein can be
executed such that the party administering a program under the
method receives fees or pays fees for use of the method (e.g., a
transaction fee, a fee based upon the total amount of money that is
the subject of the loan, or otherwise). The fees can be a lump-sum
fee, an installment fee or a combination thereof. It is possible
that the fee will be collected from the borrower, any third person
with whom the borrower has his or her financial obligation or each
in order to use the method, or each of them.
[0030] The teachings of the present invention may be employed in
combination with one or more other mortgage-related methods,
including but not limited to any of those disclosed in U.S.
Published Application Nos. 20030149656; 20040064402; 20010861126;
20020059136, 20030110122; 20020103750; 20030033241; 20060080246;
20050108028; 20050246267 or U.S. Pat. No. 5,819,230, all of which
are hereby expressly incorporated by reference.
[0031] Because the methods herein allow home-owning borrowers
relatively easy access to funds for making purchases, the methods
are particularly attractive and lend well to the cross promotion of
goods or services of third party vendors of goods or services. The
methods thus contemplate the possible additional step of
cross-promoting the method with promotion of goods, services or
both, offered by a third person. To illustrate, an insurance
company, a consumer goods company, a utilities company, a law firm,
a consulting firm, an accounting firm, or any other third person
provider of goods or services, may (alone or in cooperation with
the person administering the methods herein) create a program and
enroll a borrower to use the method via the third person. Thus, for
example, upon the purchase of an item (e.g., a car from a car
dealer), the borrower will be presented with all necessary
paperwork (e.g., tangible papers, electronic forms, or both) for
permitting him or her to use the methods herein as a borrower. This
could prove to be an attractive way to offer appliances, home
entertainment equipment, communications services subscriptions,
telephones, computing devices, mortgages or any combination
thereof.
[0032] Another aspect of the methods herein contemplates a step of
administering an incentives program that rewards the borrower with
benefits on the basis of borrower conduct. Without limitation, the
incentive may be selected from reduced interest rates resulting in
lower monthly mortgage payments, cash rebates, subscriptions,
merchandise, gift certificates, travel discounts, coupons, computer
downloadable information, waiver or discount of fees to use the
method, or any combination thereof. The borrower conduct is
selected from timely payment history, maintenance of a
pre-determined credit rating, reduction of principal balance,
elimination of debt for which the method is used to pay, or any
combination thereof.
[0033] Without intending to be limited thereby, the following
illustrations show how the methods taught herein may be
practiced.
[0034] Homeowner's insurance premiums can be calculated annually or
monthly. Upon knowing how much a homeowner's insurance policy will
cost, a modification in the interest rate charged on a mortgage is
made. The modification in the rate will be commensurate with
collecting enough money to cover the cost of the insurance policy.
By way of illustration, assuming a homeowners policy cost $1000 per
year, that amount is the equivalent to $83.33 monthly. If the
home-owning borrower has a $100,000 mortgage balance at a 6%
interest rate, then he/she is paying approximately $600 per month.
In order to address the obligation to account for the additional
payment of the insurance, the interest rate may be modified to a
higher rate, by amending the real estate financing contract during
the term of the contract, to a rate such as 7.257%, for example.
The difference between charging and collecting interest at 7.257%
rather than 6% will give the mortgage servicer an extra $83.33 per
month to pay the $83.33 owed for the borrower's insurance policy.
The borrower will no longer pay directly for borrower's insurance.
The mortgage interest rate can be modified each month based upon
the principle owed or at other regular intervals. Refunds in the
event of overpayments will be calculated at regular intervals.
Overpayments can be applied toward outstanding balances or
refunded. In the event of underpayments, balances can be modified
to reflect under collection of amounts needed.
[0035] Every time the mortgage balance changes or the amount owed
on the insurance, credit card, or other product changes the
mortgage interest charged and collected may be recalculated and/or
adjustments can be made to mortgage balances. Every time a
mortgagor wants to modify the items paid for within the mortgage,
the mortgage interest rate charged and collected will change so as
to collect the correct amounts.
[0036] By way of further illustration, suppose a borrower has a
real estate financing loan for a principal amount of $100,000
mortgage at 6%, for term of 360 months. The monthly principal and
interest is about $600. Suppose the borrower wants to include
homeowner insurance within mortgage payment, and the insurance
costs about $700 per year. According to the method herein an
additional $60 per month is collected from the borrower to pay to
insurance company (this amount may be in addition to or may already
include a fee allocable to a borrower enrollment fee). The real
estate financing contract is thus amended to make the interest rate
about 6.9%. The home-owning borrower will then pay $60 to the
administrator of the present method (e.g., a mortgage lender) and
the administrator will forward the $60 to the insurance
company.
[0037] In the next illustration, the same facts as the previous
illustration are used, except that the borrower only pays $600 of
the $660 monthly requirement. The administrator, at its discretion
(pursuant to covenants in the real estate financing contract) may
elect to pay some or none of the third party obligation of the
borrower. For instance, the mortgage lender may keep the full $600
and the insurance goes unpaid. Alternatively, the mortgage lender
will pay the insurance to protect its collateral then begin its
normal default/foreclosure process.
[0038] In another illustration, the real estate finance contract is
an adjustable rate contract, and is for a principal amount of
$300,000 with a starting interest rate of 6.375%, fixed for three
years, and an initial monthly payment of about $1870. The borrower
wants to include a $600 per month car payment within the mortgage
payment. The car is financed on a 5-year lease. During the first
three years of the mortgage the interest rate will be modified to,
for example, 9.2665% to collect a total of about $2,470, of which
the $600 is disbursed to the car finance company. If the
home-owning borrower keeps the financing contract into the fourth
year and the mortgage interest rate adjusts, then a new interest
rate modification will be calculated to charge enough to cover both
the house portion and the car portion of the payment. If the
home-owning borrower sells the house at the end of three years and
pays off the mortgage, the car payments can either be paid as part
of a new mortgage or paid directly by the obligor to the car
finance company.
[0039] In yet another illustration, the real estate finance
contract is for a principal amount of $500,000, and is at a fixed
rate of 6.6% for 30 years, with a monthly payment of about $3200.
The Borrower has a consumer credit card with a balance of $15,000
and a monthly minimum payment of $1,125. To include the credit card
payment within the real estate finance contract an amended interest
rate of about 10% will be charged on the mortgage to collect enough
to pay both the mortgage and credit card payment. A new monthly
payment of about $4200 will be charged to the Borrower. If the
credit card balance and monthly payments change, a new interest
rate will be calculated.
[0040] For the above illustrations, as with the teachings in
general herein, it is contemplated that the administrator will
report interest payments periodically (e.g., in a written and/or
electronic report to the borrower), which report will be part of a
document that typically will include an indication of payment
amounts, and will include the original interest paid from the
original real estate financing contract, and the interest paid
pursuant to the amended interest rate. It is possible that included
within any such report or supplementing the report will be a
comparison table or chart to show the borrower how the current
interest rate at which the borrower's loan stands compares with
other interest rates (e.g., prevailing mortgage rates, the prime
rate, or the like), or other financial benchmarks (e.g., treasury
notes, certain bonds, etc.). In this manner, the borrower is also
more fully informed about his or her economic opportunity costs or
other factors affecting the borrower's finance management.
[0041] It is also possible for the methods herein, including those
featured in the above illustrations to practice the method to
include one or more steps by which such that the total resulting
obligation of the borrower is less than the total of the individual
obligations. For example, in a cross-promotional scenario, if the
monthly payment under the original real estate financing contract
is $1500, and the contract is amended to address an additional
monthly obligation of $500 (e.g., for purchased consumer goods),
the amended interest rate (before considering any tax benefits) may
be less than the total of $2000. Thus, the administrator/lender and
the cross-promoting entity could offer to consumers the ability to
convert total separate obligations into a single consolidated
obligation that is less than the total of the separate
obligations.
[0042] Determination of the interest rates herein pursuant to any
amendments to the real estate financing contracts may be made
according to a predetermined formula, it may be determined with
regard to an economic indicator index, an established interest rate
(e.g., prime rate), according to treasury note rates or the like.
Interest rates may be agreed to in the real estate finance contract
to fall within a certain range, within which the lender or
administrator of the methods herein may have discretion to select
depending upon one or more factors, such as borrower's credit
rating, borrower's payment history, the amounts being advanced,
complications in the reporting of the transaction, prevailing
market rates, or any combination thereof.
[0043] In another aspect of the invention, it is contemplated that
the methods may employ one or more steps that elicit competitive
bids from vendors of products or services. That is, it is possible
that a borrower may seek to amend a real estate financing contract
according to the methods herein to purchase a particular good or
service. The methods here could provide that a plurality of vendors
of such goods or services would compete for the business of the
borrower. For example, a borrower might complete a survey or
otherwise provide a detailed specification of the good or service
sought to be purchased (e.g., via a website of the internet). The
specification would be made available for a plurality of vendors to
provide quotations to the borrower. Based upon the quotations, the
borrower would select a vendor, and consummate the transaction. As
part of the consummation of the transaction, the borrower would
employ the basic steps of the methods herein, such as by amending
the contract to enable payment for the goods or services purchased.
One specific embodiment would envision implementing a competitive
bidding process for insurance products, pursuant to which the
borrower is able to select from various vendors of insurance
products, and select the insurer based upon criteria established by
the borrower. An automated, competitive bidding process thus could
help borrowers save both time and money when shopping for products
or services and provide a mechanism to improve competition among
vendors.
[0044] As part of such a competitive bidding process, or to
otherwise participate as a vendor to which the borrower is
introduced by a lender or administrator of the methods herein, it
is contemplated a step of charging a fee for participation. That
is, participating insurance or other eligible products or services
providers may be charged a fee for having access to the borrowers
(e.g., via a website) and for being permitted to compete for the
home-owning borrowers' business.
[0045] Another possible step that may be employed in the methods of
the present invention is a step by which lenders or other
administrators of systems or methods herein compile feedback or
survey information from the borrowers and make it available to
other borrowers, potential borrowers, the goods or services
provider or any combination thereof. For example, any website or
other publication means maintained by the lender or administrator
could include a module adapted for granting access to other
potential borrowers about a participating goods or services
provider. The site may thus include a rating system where
home-owning borrowers may rate the level of service they received
from the participating providers. The site may also include each
provider's rating from corporate rating agencies. Borrowers can
review quotes by looking at the web-site where the competitive bids
are submitted, by e-mail, by mail, phone or other conventional
means and select an appropriate provider company based upon items
such as costs, payment, deductible (e.g. for insurance), reputation
and the rating of each provider company.
[0046] In the course of performing the steps of the methods herein,
it is contemplated that initial payment of insurance premiums at
inception of mortgage may be consistent with the current practice
used for funding mortgage escrow accounts at time of closings.
Thus, for example, for purchase transactions a full year of the
payments may be pre-paid prior to closing by the borrower directly
to the provider. Additionally, a portion (e.g., about 2/12.sup.th
or 3/12.sup.th) of the yearly payment may be collected from
borrowers at closing, deposited into an escrow account and used
toward any payments due the following year. Other schedules of
collecting money to pay insurance premiums or purchase transactions
may also be developed. For refinance transactions the customary
practice of funding escrow accounts at time of closing may
continue. Costs of program participation may be charged and
collected when the mortgages are closed. Renewal fees, if any, may
be billed separately or included in the interest rate
modifications.
[0047] As indicated elsewhere, the methods herein also envision
steps of issuing annual or other periodic statements or other
documents to borrowers showing how much interest was paid during
the preceding year or period. The statement may show the interest
paid including the insurance and excluding it. The statements may
be as basic as a modification of the current 1099 form sent by
lenders or their servicing partners to account for the interest
payments resulting from any amendments to the real estate financing
contract. The modified 1099 may state both interest paid on the
principal loan balance and interest paid on purchase transactions.
Interest Modification Statements may be issued when needed. Such
statements or other documents could show calculations used to
determine the amount of interest projected to be charged for some
future period (e.g., the next twelve months). The modified interest
rate will be a function of the base interest rate charged on the
loan balance and interest charged to pay for purchase transactions.
Such modifications may be needed when the cost of the insurance
changes, or when the value of the purchase transactions change
(e.g. new items purchased, old items paid off, etc . . . ). When
mortgage balances are paid off home-owning borrowers will receive
notices telling them they should continue to pay their payments
directly to their product and service providers or their loans or
policies will lapse.
[0048] Yet another possible aspect of the invention is an optional
step of one or more of the participating vendors offering the
borrowers who enroll and practice the methods herein some form of
an exclusive benefit (e.g., discounts, value-added services, or
otherwise). For example, because of the increased likelihood of
timely payments, and reduced risk of carrying the credit with the
borrower, vendors such as cable and satellite television providers,
telephone service providers, home improvement stores, credit card
providers, providers of insurance products, providers of security
systems etc may offer their products and services at discounted
prices pursuant to such a step. Discounted fees and interest rates
on mortgages may also be offered to induce participation in the
invention.
[0049] Likewise, the methods herein may include one or more steps
of offering (e.g., through a network user interface, website or
other means), participating home-owning borrowers some form of
subscription-type discount services (e.g., via coupon books,
whether purchasable or complimentary) for discounts from vendors
and service providers. The "coupons" may be targeted based upon
demographics, using criteria such as address, home values, income,
age of home, length of time of ownership and other known
information about participating home-owning borrowers. In the
course of practicing the methods herein it is thus possible that a
step of compiling and analyzing such demographic information is
employed.
[0050] Another possible step for use in the methods of the
invention herein contemplates offering participating home-owning
borrowers a credit vehicle (e.g., a credit card, such as a house
branded credit card), insurance products, financial investment
products, or any combination thereof. Any of these may be combined
in with the underlying real estate financing contract such that a
single statement document may be issued to the borrower, and a
single consolidated payment made by the borrower, effectively
thereby tying directly into their mortgage payments, balances, and
consolidated monthly mortgage statements. Such offerings may be
priced at discounts compared to other providers of similar products
and services.
[0051] The present invention is directed to a method and system for
amending, charging and collecting interest and/or amending charging
and collecting balances on mortgages and other real estate secured
loans in a manner that will enable home-owning borrowers to pay
financial obligations through their mortgage payments. When
home-owning borrowers arrange to pay for items such as homeowner's
insurance and condominium association dues and cooperative fees
through mortgage interest payments, their payments become tax
deductible. Modifications in mortgage interest rates and/or
balances owed will also be available to include the costs of other
insurance products and policies, payments on credit cards and
student loans, payment of property taxes, and payments on purchases
and leases of products such as motor vehicles. Homeownership has
the possibility to be easier as other costs of living may become
more affordable.
[0052] As seen, the methods herein advantageously permit a
relatively flexible and convenient financing agreement for a
homeowner borrower seeking to borrow money through an existing real
estate financing contract, particularly a financing contract
pursuant to which the borrower's home is placed at risk of
foreclosure in the event of default by the borrower. In one
preferred aspect, the methods herein are performed free of a step
of re-qualifying the borrower, appraising the value of the real
estate, or both during the term of the contract and after the step
of receiving the request. Additionally, the methods are employed to
meet mortgage underwriting guidelines, as established from time to
time by FANNIE MAE, FREDDIE MAC, FHA, VA, non-conforming mortgage
investors, and the sub-prime mortgage market.
[0053] The teachings herein have widespread application for
efficient and economical purchase of various goods, services,
financial instruments, investment vehicles or other products,
ranging from an improved method and system of paying for premiums
due, paying for purchases, paying debt instruments, taxes and
assessments, and/or paying into savings or investment accounts,
such as but not limited to: insurance products, insurance policies
(excluding private mortgage insurance and lender paid mortgage
insurance), condominium association and cooperative dues, consumer
goods, credit card debt, student loan debt, property taxes and
other real estate assessments, encumbrances on properties that are
junior liens to first mortgages (e.g. home equity loans and fixed
rate second and third mortgages), depositing money into investment
accounts, stock brokerage and mutual fund accounts, money market
accounts, certificates of deposits, savings accounts, checking
accounts, and retirement accounts, by charging and collecting
interest on both fixed and adjustable rate mortgages and all other
liens on residential real estate to the extent needed to pay for
such products.
[0054] The teachings also facilitate the ability to allow persons
to purchase items that traditionally have been acquired through
normal consumer debt, but instead enabling these persons to benefit
from the real estate interests owned by them, such as from the
resulting charges and collection of interest on both fixed and
adjustable rate mortgages and all other liens on residential real
estate to the extent needed to pay for such goods and services or
other charges due on these goods or services. Accordingly, the
methods and systems contemplated in this invention, may further
include charging an increased interest rate on both fixed and
adjustable mortgages and other residential liens above and beyond
that which mortgagors would otherwise agree to (or in the case of
existing mortgages have agreed to) to pay premiums or other charges
due on goods and services. Thus, another aspect of the invention
contemplates the possibility of including one or more steps such as
a step of: i) paying for goods and services by amending balances
owed on new and existing mortgages to charge and collect for the
payments due on goods and services; ii) paying for goods and
services, by offering a combination of amending mortgage balances
on mortgages, charging fees in the origination of mortgages, and
amending interest rates on mortgages to the extent needed to pay
for payments due on goods and services (excluding lender paid
mortgage insurance and private mortgage insurance); or both i) and
ii).
[0055] According to one approach, the methods and systems
contemplated in this invention may further include a step of
amending interest rates and or balances due on mortgages when goods
and services are paid off, cancelled, or the consumer wants to
cancel the arrangement of paying for goods and services through his
or her mortgage so that the mortgage balances and or interest rates
are reduced to their pre-adjustment balances and or rates.
[0056] The invention further may be employed for transferring
balances owed on goods and services from lien to lien and from one
property to others encompassing both refinancing of liens and or
selling property and buying new property.
[0057] The methods and systems of this invention include charging
and collecting interest on a monthly basis or other calendar based
system then distributing the interest (or other money collected) as
needed to pay for money owed on goods and services. Additionally,
including charging fees to home-owning borrowers and or mortgagors
who want to participate in the program by permitting them to pay
for goods and services through adjustments to the interest, fees or
balances on their mortgages.
[0058] The methods and systems of this invention, further include
charging fees to providers of goods and services who offer
homeowners, homebuyers, and mortgagors the opportunity to pay for
goods and services by offering them interest rate amendments,
modifications, charges or fees or balance amendments that permit
homeowners to pay for goods and services through payments made on
mortgages and other liens on real estate. Additionally, it is
contemplated that there could be other fees charged to providers of
goods and services (e.g. retail stores, vehicle sales/leasing
companies, taxing authorities, insurance underwriters, insurance
agents, insurance brokers, insurance companies, and all persons
and/or entities offering to sell or broker insurance) who permit
payment for their goods and services through payments made on
mortgages and other liens on real estate.
[0059] The invention further contemplates including amending,
pricing, originating, underwriting, modifying, selling, marketing,
servicing, accounting and recording of mortgages and other real
estate secured liens that includes amending the interest rates
charged and/or balances due in amounts necessary to pay amounts
owed on goods and services.
[0060] The invention further contemplates modifying the interest
rates charged and/or balances due on mortgages and other real
estate secured liens as often as needed to reflect changes in the
status of the goods and services (e.g. balances owed, balances paid
in full, returns of consumer goods, credit due, changes in coverage
provided by insurance policies changes in condominium association
and cooperatives fees, termination of insurance policies and
products, and mortgagors desire to pay for insurance premiums
and/or products and condominium association and cooperatives fees
through channels other than their real estate loans).
[0061] As indicated in portions of the previous discussion, another
aspect of the invention may include maintaining a network user
interface or web site (e.g., a secure site that requires log in
identification, personal password or other unique identifier
information for permitting access). The network user interface or
website may be maintained as a means for providing financial
services to individuals, such as services directed to personalized
wealth management, debt management, savings, financial planning or
any combination thereof. The services provider may coordinate in
combination with the network user interface or website, trained
professionals or other personnel, who are equipped to answer user
questions, provide advice or otherwise interface with a customer in
real-time, after a period of time has elapsed, or both.
[0062] The network user interface or website will preferably permit
a user to establish one or more accounts. The network user
interface or website will also be adapted to afford access to the
user to specific information about the accounts, such as balances,
account histories, forecasts, or otherwise on all participating
accounts (both debts and investment accounts), provide models of
savings that may be achieved by using the invention, and may also
provide mechanisms to initiate requests for payment amendments as
taught within.
[0063] In one aspect, the network user interface or website is
adapted to graphically display (e.g., through graphs, charts,
spread sheets or other visual displays, the financial advantages of
making specific amendments to a user's finances by employing the
methods herein. The network user interface or website preferably
will be adapted to supply a user with information about balances
owed, payments due, length of time to pay off obligations based
upon particular increases or decreases made in the monthly
payments, and potential financial gains by paying debts through
mortgage indebtedness.
[0064] Another feature or step that preferably will be employed in
the methods herein (e.g., included as a tool on the network user
interface or website) would involve providing amortization
schedules for homeowning borrowers to estimate potential savings
possible by varying payment amounts, payment schedules or both.
Calendaring (or otherwise sending reminders) of electronic bill
payments may be performed according to the methods (again, possibly
through the network user interface or website), for helping to
reduce the chance of late payments and late fees.
[0065] Yet another possible feature includes a step of providing a
home-owning borrower with an investment vehicle in the course of
practicing the methods herein. For example, through any network
user interface or website (or by other means) participants may
create savings plans, individual investment accounts, and
participate in other investment opportunities such as buying
stocks, bonds, certificates of deposits and money market
investments, in which gains achieved from practicing the invention
can be deposited for long term growth. One possible approach
includes a step of applying gains from investments toward the
payment of the obligations under the real estate financing
contract, such as for reducing the outstanding balance under the
contract. Any such web site, or other suitable means, could provide
investment strategy models and opportunities charting potential
long-term gains that may be earned by practicing the invention.
Likewise, one or more internet links may be offered whereby
participants may open investment and savings accounts through a
preferred vendor. Through the web site, information and funds may
be transferred to such vendors to facilitate using the savings from
the invention to create long term savings and investment plans.
[0066] In the course of administering any such website, it is
possible to include a step of providing access to account
information of a particular home-owning borrower to authorized
third parties. For example, secondary and perhaps limited access
passwords may be available for participants to share selected data
with their tax preparers, accountants, CPA's, financial advisors,
lawyers, and others of choice.
[0067] In one aspect, the methods and system herein contemplate the
sale of advertising or promotions on any network user interface or
website by third party providers of goods and services, e.g., by
providing participating vendors a venue for offering discounts,
marketing, awards bonuses, coupons or other incentives to those who
use the methods taught herein. Any such network user interface or
website may also provide access for allowing users to access
on-line presentations (in real-time or after a lapse of time).
[0068] The methods and systems herein also contemplate providing
secure e-mail addresses and access to an electronic network (e.g.,
an intranet) may be offered to participants allowing creditors and
debtors an easy flow of information. These e-mail addresses and web
site will provide a unique communication hub offering homeowners
access to their accounts and participating vendors. Information may
be easily and remotely accessible to receive and track all
participating vendor's bills. Requests to consolidate debts and
remote communications to all creditors can be made through this
exclusive e-mail system. Access to account histories and customer
services inquiries may be available through theses systems. Also,
special discounts, bonuses or other incentives can be offered
through this e-mail system to encourage further use of the methods
herein disclosed. Also, the e-mail system can be used for cross
marketing of services and products, account balance alerts,
delinquency notices, credit balance alerts, and a variety of
similar communications.
[0069] Though the provision of a website herein contemplates the
use of a network such as the Internet, it is not limited solely to
the Internet. Other networks can be employed as well. Further,
though it is anticipated that many users will access account
information from a personal computer, the use of other devices for
obtaining access are also possible, including for example, cell
phones, personal digital assistant devices, or even free-standing
kiosks (e.g., as part of an ATM machine). Thus, unless specifically
excluded, references herein to the use of a web site also
contemplates the ability to access and electronic information
network from a user interface other than a web site.
[0070] The methods of the invention herein may be practiced at
various times in a real estate financing transaction. For example,
the ability to secure additional funds by amending the financing
contract during its term to account for the providing of the funds,
and in direct response to the transaction of providing of the
funds, to increase the interest rate to one or more interest rates
different from the first predetermined interest rate, to increase
the principal amount, or a combination thereof may be offered to a
potential user when they inquire about home mortgage loans. As part
of a mortgage application a user may be offered an opportunity to
apply to participate in such a program. A potential mortgagor may
accept an offer to have their mortgage or other real estate secured
loan enrolled as a participating mortgage. Literature may be given
with mortgage applications describing the benefits of making their
mortgage eligible to participate in the invention. The literature
may also provide lists of participating vendors such as insurance
companies and credit card providers. Examples of such literature
include one or more of (i) a document (as with all reference to
"documents" herein, the term is used broadly to encompass paper
documents, electronic documents (which may include a link to a
website) or otherwise) that describes the methods herein; (ii) a
document that identifies participating vendors; (iii) a document
that illustrates sample calculations to show the possible savings
available; (iv) personal release, waiver, power of attorney and/or
authorization documents to grant access to information about the
borrower, to authorize an agent to act on behalf of the borrower,
or both; (v) confirmation receipt documents to acknowledge
enrollment; (vi) financial data statements; (vii) enrollment
applications, or any combination thereof. Some or all of the above
documents may be combined into a single document, or split into
plural documents. Further some or all of the above documents may be
incorporated into documents conventionally employed for servicing a
mortgage or other loan, (e.g., incorporated into a mortgage or
other loan application).
[0071] Participation in the invention may also be offered by
insurers, credit card companies and creditors. Such companies may
make applications to participate in the invention available at
point of purchase and through their normal correspondence (such as
monthly billing statements) with debtors. Applications may also be
available through financial software such as tax preparation
software, investing software, Internet web sites, banks, tax
preparers, financial advisors, stockbrokers, lawyers or other
professionals.
[0072] In the following discussion, illustrations are provided
(without limitation) to demonstrate how aspects of the invention
may be performed. In one illustration, it is supposed that an
applicant is interested in learning about the "Improved Mortgage
Loan Product". Among the forms that might be sent to the applicant,
a form titled to reflect that it is a "Program
Description/Explanation" may be provided (may be e-mailed, faxed,
down loaded from web site, mailed etc.), with (or even before)
mortgage application documents or mortgage estimates. The "Program
Description/Explanation" may also include information about how to
participate, possible enrollment and renewal costs (if any) of
program participation. The "Program Description/Explanation" may
also refer people to a website where additional information is
provided such as copies of program disclosures, on-line enrollment
procedures, an on-line calculator that will calculate the modified
interest rate based upon program participation and e-mail addresses
where program questions may be addressed. An example of one such
description might include definitions of significant terms, an
overview of the procedure for implementing the program, and other
explanatory information, and be worded to address some or all of
the following substantive informational components in Form 1:
Form 1
[0073] One of the most important features of homeownership is the
tax deductibility of the interest paid on mortgages. The deduction
of interest paid on mortgages is one reason that homeownership is
more desirable than renting. The Improved Mortgage Product helps
home-owning borrowers maximize their interest deductions by
including the cost of homeowners insurance with home-owning
borrowers' mortgage interest payments. This is accomplished by
modifying your mortgage's interest rate by an amount sufficient to
collect enough money during the course of the year to renew your
insurance policy on its due date each year.
[0074] View our hypothetical examples depicting how program
participation works and potential savings to be achieved by
participating in the Improved Mortgage Loan Program. Each
home-owning borrower will achieve different results from the
example based upon his or her mortgage amount, interest rate and
insurance costs. Should you agree to enroll in this program you
will acknowledge and agree to a charge of an enrollment fee. Should
you desire additional information about this unique program, or if
you want to see how this Program can help you save by performing
sample calculations using our calculator estimator, please visit
www.improvedmortageloanproduct. Program questions may be e-mailed
to improvedmortgageadministrator.com. To start realizing the
benefits of this Program, please complete the application form and
return it to your lender.
[0075] Additional detailed explanatory forms might be included. For
example, for one embodiment, a detailed explanation might include a
summary such as the following Form 2:
Form 2
Improved Mortgage Loan Product--How it Works
[0076] 1. Point of Sale occurs when an inquiry for a mortgage/home
equity loan is made. Marketing/advertising may be initiated by
lenders (licensed to offer Improved Mortgage Product) to generate
inquiries about applying for a mortgage that includes the Improved
Mortgage Loan Product. Lenders may attract more business than their
unlicensed competitors by offering the Improved Mortgage Loan
Product in conjunction with their various mortgage products.
Participating mortgage providers will solicit borrowers to obtain
financing including the "Improved Mortgage Loan Product" by
offering a potentially tax deductible method of paying their home
owners insurance premiums (and other participating products or
services). [0077] 2. If applicant is interested in learning about
the "Improved Mortgage Loan Product" a written Program
Description/Explanation will be provided (may be e-mailed, faxed,
down loaded from web site, mailed etc.), with (or even before)
mortgage application documents or mortgage estimates. The written
Program Description/Explanation may also include information about
how to participate, possible enrollment and renewal costs (if any)
of program participation. It may also refer people to a website
where additional information is provided such as copies of program
disclosures, on-line enrollment procedures, an on-line calculator
that will calculate the modified interest rate based upon program
participation and e-mail addresses where program questions may be
addressed. Also provided will be a List of Participating Vendors, a
Program Hypothetical will provide a hypothetical example of the
savings achieved by participating in the Improved Mortgage Loan
Product and a Written Authorization to Share Personal Information
with Mortgage Product Partners (such as insurance companies). If
borrower wants to participate in "Improved Mortgage Loan Product"
and returns signed and completed forms and authorizations, then
information relevant to obtaining home owners insurance quotes or
other eligible products or services is forwarded from Mortgage
Lender or Program Administrator to participating insurance
carriers, agents or brokers/producers to underwrite and quote the
cost of coverage. If authorized by borrower, data needed to issue
insurance quotes may be posted on a secure website enabling
participating/licensed homeowners' insurance providers to post
their quotes. This automated, competitive bidding process will help
borrowers save both time and money when shopping for insurance.
Participating insurance providers may be charged a fee for having
access to the website and for being permitted to compete for
homeowners' business. The site may also include a rating system
where home-owning borrowers may rate the level of service they
received from participating insurance providers. The site may also
include each insurance provider's rating from corporate rating
agencies. Borrowers can review quotes by looking at the web-site
site where the competitive bids are submitted, by e-mail, by mail,
phone or other conventional means and select an appropriate
insurance company based upon premium, deductible, reputation and
the rating of each insurance company. [0078] a. Insurance providers
will be provided with copies of "Written Authorization," copies of
home appraisal or other home valuation documents and relevant
information from each mortgage application such as the purchase
price or value of the subject home, dollar amount of mortgage,
lender's mortgagee clause and loan number, name and contact
information for the borrowers/insured's. [0079] b. Insurance
providers will provide quotes using one or more than one of the
methods noted above (or via communication methods to be added at a
later date) to borrowers and/or Mortgage Provider or via Product
Administrator. [0080] 3. The Borrower may pick his or her own
insurance provider and will inform mortgage lender and insurance
company of his/her choice of Insurance Provider. Insurer provides
final details of selected coverage and cost of insurance to
borrower and to mortgage lender. [0081] 4. An appropriate
Acknowledgement of Participation in Improved Mortgage Product,
shall be prepared by Improved Mortgage Loan Product
Administer/CPU/web-site1 or other provider acknowledging borrower's
desire to enroll in and participate in the Improved Mortgage
Product. [0082] 5. Borrowers will be required to sign, date and
return the Acknowledgment of Participation to Mortgage Provider
and/or Product Administrator acknowledging their participation in
the Alternative Mortgage Product. [0083] a. The Acknowledgment of
Participation will be duplicated and included with mortgage closing
documents to again confirm borrowers' decision to participate in
the Improved Mortgage Loan Program. [0084] 6. Initial payment of
insurance premiums at inception of mortgage may be consistent with
the current practice used for funding mortgage escrow accounts at
time of closings. [0085] pa. For purchase transactions a full year
of the premium may be pre-paid prior to closing by the borrower
directly to the insurer. Additionally, 2/12.sup.th's or
3/12.sup.th's of the yearly premium may be collected from borrowers
at closing, deposited into an escrow account and used toward
renewal of insurance the following year. Other schedules of
collecting money to pay insurance premiums may also be developed to
address specific needs. [0086] b. After the closing, all additional
funds needed to renew the homeowners' insurance will be paid
through the modifications to the interest charged and received when
the monthly mortgage payments are made. The funds collected will be
used to renew the insurance policies when the premiums become due.
[0087] c. For refinance transactions the customary practice of
funding escrow accounts at time of closing may continue.
Thereafter, all additional funds needed to renew the homeowner's
insurance will be paid through modifications to the interest
charged and received when the monthly mortgage payments are made.
[0088] d. Costs of program participation may be charged and
collected when the mortgages are closed. Renewal fees, if any, may
be billed separately or included in the interest rate
modifications. [0089] e. As mortgage interest payments are made
funds needed to renew insurance will accumulate until it is time to
renew the policy by making the next years premium payment. The
manner of renewing the policies will be the same on purchase
mortgages and refinance transaction. [0090] f. Annual Statements
will be issued showing how much interest was paid during the
preceding year. The statement may show the interest paid including
the insurance and excluding it. The statements may simply be a
modification of the current 1099 form sent by lenders or their
servicing partners. The modified 1099 may state both interest paid
on the principal loan balance and interest paid on insurance.
[0091] 7. Interest Modification Statements may be issued when
needed. These statements likely will show calculations used to
determine the amount of interest to be charged for the next twelve
months. The modified interest rate will be a function of the base
interest rate charged on the loan balance and interest charged to
pay for insurance. Such modifications may be needed when the cost
of the insurance changes. [0092] 8. When mortgage balances are paid
off borrowers will receive notices telling them they should
continue to pay their premiums directly to their insurers or their
policies will lapse.
[0093] Also provided to a prospective home-owning borrower
interested in using the methods and/or systems herein may be a
"List of Participating Vendors", to include the names and
information about those vendors who already participate in this
program. It is contemplated that this list may be organized by a
number of methods, such as, but not limited to, by product type,
alphabetical, by industry group, or geographically.
[0094] A "Program Hypothetical Example" may be provided to
illustrate for the applicant a hypothetical example of the savings
achieved by participating in the Improved Mortgage Loan Product. In
an illustrative example of the "Program Hypothetical Example"
applicants or potential applicants could receive information such
as in Form 3:
Form 3
[0095] "For example, if you obtain a $100,000.00 thirty year fixed
mortgage at an interest rate of 6.5% your monthly principal and
interest payment will be $632.07.
[0096] After making your first twelve payments your will have paid
$6,467.07 in tax-deductible interest." Assuming you have a
homeowner's insurance policy that costs $650 per year or $54.17 per
month, your principal and interest payment will be $632.07 plus
monthly insurance of $54.17, for a total of $686.24. By
participating in the present program your mortgage interest rate
will be modified/amended by an increase of rate to an interest rate
of 7.30985%. The monthly mortgage payment will be $686.24. You will
need to consult with your tax advisor to assure that you qualify,
and to determine the appropriate tax rate for you. However, after
making the first twelve payments while participating in the Program
$7,117.11 will have been paid in what is anticipated to be regarded
as tax-deductible mortgage interest payments. Based upon this
example your Program participation will create an extra $650.00 in
tax-deductible payments for you. After ten years of program
participation you will have $6,500 more in tax-deductible mortgage
interest payments than if you had not participated in the
Program.
[0097] Additionally, a "Written Authorization to Share Personal
Information with Mortgage Product Partners" (e.g. insurance
companies, retail stores, taxing authorities), and some "Enrolment
Application" forms may be provided. It is contemplated that the
above forms should contain the standard personal information that
most lenders require (e.g. Name, Address, Income Level, Employment
Status/information, Social Security Number, etc . . . ), albeit the
personal information released to the "Mortgage Product Partners"
should be kept to an absolute minimum. For example, one such
authorization document might include provisions to the effect of
Form 4:
Form 4
[0098] Please share only as much information (but not my social
security number or bank account numbers) with the following
insurance companies (listed as follows) so that they may issue
quotes and compete for my homeowner's insurance policy. The
insurance companies listed below will be provided with Applicant's
name, address, contact information and home's value.
[0099] If a borrower wants to participate in Improved Mortgage Loan
Product" and returns a signed enrollment documentation, then
information relevant to obtaining home owners insurance quotes or
other eligible products or services may be forwarded from Mortgage
Lender or Program Administrator to participating insurance
carriers, agents or brokers/producers to underwrite and quote the
cost of coverage. "Signing" is not limited to physically affixing a
signature, but could be electronic in nature. Once authorized by a
borrower, data needed to issue insurance quotes or other eligible
products or services may be posted on a secure website enabling
participating/licensed homeowners' eligible products or services
providers to post their quotes, which is envisioned to be an
automated bidding site.
[0100] An "Acknowledgement of Participation in Improved Mortgage
Product", may be prepared by Improved Mortgage Loan Product
Administer/CPU/web-site/or other provider acknowledging borrower's
desire to enroll in and participate in the Improved Mortgage
Product. An illustrative document might provide for signature by
the borrower, date, identification of other potentially significant
individuals (e.g., insurers, agents or otherwise), and include
statements to acknowledge participation in the program, to address
terms and conditions of the program and/or to acknowledge potential
forfeiture consequences of failing comply with borrower's
obligations. For example, one such document might include to such
as Form 5:
Form 5
[0101] We/I, (the mortgagors and insureds) hereby agree to
participate in the Improved Mortgage Product. I/we understand that
the interest rate charged on my/our mortgage will be modified by an
appropriate amount to include the cost and payment of my
homeowner's insurance. If the cost of my homeowners insurance
changes my mortgage interest rate will change by a commensurate
amount. By participating in the Improved Mortgage Product I/we
understand that rather than paying a separate and distinct amount
of money for the cost of our home owners insurance, I/we will
instead pay a modified interest rate on our mortgage and my/our
mortgage servicing company will pay renewal premiums charged by our
insurance company. I/we further understand that if our mortgage
payments become delinquent the mortgage servicing company may not
have adequate funds to pay the premiums that become due on our home
owners insurance. In such an event the servicing company may chose
to pay the premiums and exercise any or all its options under the
default provisions of either or both the mortgage and the note (the
mortgage documents). The base interest rate on my mortgage/note is
XXX%. The modified interest rate on my mortgage/note is YYY%. I/we
agree to pay a non-refundable enrollment fee to participate in the
Improved Mortgage Loan Product of $xxx.xx which will be paid at the
time of my mortgage closing.
[0102] The above detailed discussion is based upon the employment
of a core combination of steps that envision maintaining a real
estate financing contract with a borrower, (and particularly a
home-owning borrower) which contract is a loan for a principal
amount, established at a first predetermined interest rate, and
secured by a mortgage on residential real estate held by the
borrower; b) receiving a request by the borrower (or its designated
representative) to assume responsibility to pay a financial
obligation incurred by the borrower during the term of the
financing contract; c)engaging in a transaction for providing funds
for payment of the financial obligation of the borrower, by paying
the financial obligation on behalf of the borrower, by advancing
funds to the borrower directly, or a combination thereof; d)
amending the contract during its term to account for the providing
of the funds, and in direct response to the transaction of
providing of the funds, to increase the interest rate to one or
more interest rates different from the first predetermined interest
rate, to increase the principal amount, or a combination thereof;
and receiving interest payments from the borrower pursuant to the
amended contract. As indicated the methods may be practiced by any
of a number of entities, such as lenders, vendors of goods and/or
services, or some other entity having the responsibility for
performing the steps of the methods and interacting with the
borrower.
[0103] The various potential additional steps that may be employed,
as have been described herein, may be employed singly or in
combination with each other, and in combination with some (and more
preferably all) of the above-mentioned (in the preceding paragraph)
core steps. For example, it is possible that some (and more
preferably all) of the core steps from the immediate preceding
paragraph may be employed in combination with one or any
combination of steps described herein, such as those selected from:
[0104] a) providing a home-owning borrower with an investment
vehicle in the course of practicing the methods herein; [0105] b)
providing a network user interface, an internet website, or other
borrower-accessible network for performing some or all of the
steps; [0106] c) providing documents that include account
information of the borrower; [0107] d) providing a competitive
bidding system for offering goods or services to the borrower;
[0108] e) granting authorized access to a borrower's account to
third parties; [0109] f) generating documents for the borrower to
describe results obtained from the use of the methods; [0110] g)
providing informational and/or explanatory forms to the borrower
about the methods and system described herein; [0111] h) regularly
providing current and potential mortgage product customers updated
lists of participating providers and products as such lists
changes; [0112] i) regularly providing current mortgage product
customers with information on new and updated services; [0113] j)
providing statements of interest paid and/or any possible mortgage
product transactions (e.g. fees, points, etc.) that may have a tax
effect to a borrower and/or a taxing authority (as required by
law), [0114] k) amending the contract during its term to account
for any changes in the status of the items being serviced by the
mortgage product (e.g. item paid-off, new item added, item deleted
from the mortgage product, change in insurance carrier, etc.), or
[0115] l) any combination of the above.
[0116] The explanations and illustrations presented herein are
intended to acquaint others skilled in the art with the invention,
its principles, and its practical application. Those skilled in the
art may adapt and apply the invention in its numerous forms, as may
be best suited to the requirements of a particular use.
Accordingly, the specific embodiments of the present invention as
set forth are not intended as being exhaustive or limiting of the
invention. The scope of the invention should, therefore, be
determined not with reference to the above description, but should
instead be determined with reference to the appended claims, along
with the full scope of equivalents to which such claims are
entitled. The disclosures of all articles and references, including
patent applications and publications, are incorporated by reference
for all purposes.
* * * * *
References